Crowdsourced Products Sell Better When They’re Marketed That Way

Companies are increasingly using crowdsourcing to identify promising ideas that they can translate into winning new products. Our past research highlights the promise of this trend: In the case of a major baby products firm, for example, the best user-generated ideas identified were even more innovative and provided better benefits to the consumer than the best ideas generated by the firm’s designers. In the case of the Japanese consumer goods firm Muji, we found that crowdsourced products sold better and were more profitable.

We decided to look at how consumers perceive crowdsourced new products and in particular how the inferences they make impact their choices. We found that labeling crowdsourced new products as such — that is, marketing the product as “customer-ideated” at the point of purchase (POP) — increased the product’s market performance by up to 20%.

The findings are based on two randomized field experiments conducted with Muji. One study was run in its food division and one in its consumer electronics department. In both cases, crowdsourcing was used to generate a new product (a flavored pretzel and a security buzzer, respectively). We then manipulated the POP display as the product was introduced to market. In one set of stores the POP display was silent about the product’s source of design. The other stores’ POP displays sold the product explicitly as customer-ideated. The latter set of stores sold substantially more of the product.

What makes this cue sell so well? A series of more controlled follow-up studies revealed that consumers perceive customer-ideated products to be based on ideas that address their needs more effectively. In short, a product appears to be of higher quality if marketed as customer-ideated. Think of being in the market for a lunch box for your kid and seeing Yumbox marketed as “made by moms.” Or consider Red Chili, a climbing shoes brand created by a user-entrepreneur who prominently uses the slogan “Only climbers know what climbers need” on his website. If you respond to these cues like our study participants did, you likely will infer that something ideated by users will fit your needs better.

This doesn’t mean every product should be crowdsourced and marketed as such. First, getting crowdsourcing to work isn’t trivial. If the product you come up with is lower quality, marketing it as crowdsourced could backfire. In other words, if we already think the product is bad, drawing attention to crowdsourcing could make us think of a crowd of Homer Simpson types instead of the field’s leading-edge users.

Furthermore, the positive effects of labeling products as customer-ideated might be restricted to domains where consumers perceive the crowd to have the necessary skills to come up with great ideas. This might be the case with many low-tech consumer products like the ones we studied but not with complex, high-tech products.

Finally, in some cases “customer-ideated” might simply be the wrong cue to send your customers. For example, although fashion brands might benefit from crowdsourcing in the sense that it could generate promising ideas, luxury brands like Gucci or Prada should not actively market their products as customer-ideated, as such products would fail to signal high status.

However, when customers want to feel close to and affiliated with like-minded others and when they think users know better what other users need, there might be a hidden extra value to using crowdsourcing. It might not only constitute a promising route to better new products but also help marketers set their products apart from the competition by actively communicating the source of design to customers.

Martin Schreier is a professor and the head of the Institute for Marketing Management at Vienna University of Economics and Business.